The Law Handbook 2024

442 Section 5: Managing your money Step 4: If an application is rejected, apply to a dispute resolution scheme If the credit provider rejects an application under section 72(4) of the NCC or does not respond to the application within the timeframes required under section 72(5) of the NCC, the debtor can apply to the dispute resolution scheme of which the credit provider is a member for assistance in resolving the dispute (see ‘Solving disputes with creditors’ in Chapter 5.10: Unauthorised transactions and ePayments Code). A credit provider that rejects a hardship application is not allowed to take enforcement action within 14 days from the day the credit provider has given its notice of rejection (s 89A(2)(b) NCC). The debtor can apply to a court for an order that the credit provider change the contract (s 74 NCC). An application under section 74 of the NCC can only be made if the debtor has already applied to the credit provider for the change under section 72 of the NCC. Enforcement of credit contracts Default notice Under section 88 of the NCC, the credit provider cannot issue legal proceedings or repossess or take any other enforcement action unless: • the debtor has defaulted (i.e. is behind in payments); • the credit provider has given to the debtor and guarantor, or posted to the debtor’s and guarantor’s last known address, a default notice allowing the debtor a period of at least 30 days to remedy the default (so it is important for this reason to keep the credit provider informed in writing of any change of address); • the account remains in default at the end of the notice period; • in case of a reverse mortgage entered into on or after 1March 2013, the credit provider has spoken by telephone or in person to either the debtor, a practising lawyer representing the debtor or a person with a power of attorney relating to the debtor’s financial affairs and confirmed with them that the debtor has received the default notice; and • if the debtor or guarantor has given a credit provider a hardship notice under section 72 of the NCC in relation to a contract entered into on or after 1 March 2013 or a postponement request under section 94 of the NCC: a the credit provider has also given them notices in response to the requests (ss 89A(2)(a), 94(2) NCC), and b it is more than 14 days since the credit provider gave the notices (ss 89A(2)(b), 94(3) NCC). The section 88 notice must set out certain information that helps the debtor protect their rights, including: a the default; b action necessary to remedy the default; c information prescribed by the NCCP Regulations about the debtor’s rights to make a hardship application, request to postpone enforcement, make a complaint to a dispute resolution scheme (see ‘Solving disputes with creditors’ in Chapter 5.10: Unauthorised transactions and ePayments Code); d that a subsequent default of the same kind that occurs during the notice period may be the subject of enforcement proceedings without further notice if it is not remedied within the period; e that, under the Privacy Act 1988 (Cth), the debt may be included in a credit-reporting agency’s credit information file about the debtor if, among other things, the debt remains overdue for 60 days or more; and f that repossession and sale of mortgaged property may not extinguish the debtor’s liability. A credit provider may commence proceedings against a debtor even if a default notice does not comply with section 88 of the NCC if the debtor received sufficient notice of the grace period to remedy the default (see Monas v Perpetual Trustees Victoria Ltd [2011] NSWCA 417 and Commonwealth Bank of Australia v Kilpatrick [2013] NSWSC 169). However, the credit provider commits an offence under the NCC if it fails to provide the debtor with a section 88 notice that does not contain the required information. The section 88 preconditions to taking enforce­ ment action do not apply if the credit provider proves that there are reasonable grounds for believing: • the credit provider was induced to enter the con- tract or mortgage by fraud by the debtor; • the goods mortgaged have been or will be concealed, damaged or disposed of; • the credit provider cannot find the debtor despite reasonable efforts; or